One of my favorite personal finance tactics is “snowflaking.” For those unaware, “snowflaking” refers to the idea that if you make little frugal steps throughout the month, you simply add the amount you saved with that method and include the total as an extra payment at the end of the month. So, for example, if you used coupons to save $5 on your normal purchases, you would then add $5 to an extra debt payment at the end of the month. This knocks $5 off of the total amount you owe, reducing your interest owed in future months and getting rid of the total debt that much faster.

“Snowflaking” is almost always used in a debt-related context – the name itself comes from the popular “debt snowball” – but I’ve actually found that snowflaking is incredibly powerful for almost any goal in life. In fact, I use snowflaking all the time in my own life for bigger goals.

Here are some examples for how I use snowflaking for some of my personal goals.

Bigger savings goals The biggest savings goal that Sarah and I have right now is for our next home. We intend to buy a piece of land in the country with some wooded area on it (expensive) and then build a house to spec on that land (even more expensive), along with a barn (whew!).

So I keep that big goal in my mind as often as I can. I have a picture of a home with a barn and some woods in the back that I look at all the time to keep myself reminded of it. When I make a choice to save a few bucks – buying something in bulk or some similar little effect – I log onto my online banking and transfer that amount to a separate savings account, never to be touched until we’re ready.

With every little choice, that account grows and we move a little closer to our dreams.

Motivational goals I’d like to get a better pair of walking shoes. Instead of just going out and buying a new pair, I simply pledge that if I reach the 250 mile mark with my walking this spring and summer, I’ll allow myself to buy the shoes.

Again, this is snowflaking, just in a little bit different form. If I don’t have the motivation to go on a really long walk, I’ll just talk myself into a short walk around the park near our house. I’ll kick out a mile and a half or two miles and be back at the house in less than a half an hour, but that little bit contributes to my larger goal.

Cash snowflaking can work well alongside this non-cash goal. If I talk myself into walking for an hour instead of renting a pay-per-view movie or something like that, I can contribute the savings to an account for that goal.

Splurges Let’s say, hypothetically, that I wanted an iPad. I might want that in the short term, but still want to save for the bigger goal in the long term. What do I do?

I could simply split the snowflakes, putting half of the money into the big goal account and the other half into the iPad account. I could also just go for the short term goal now, putting all of it towards the iPad and moving back to the other goal once I have my gadget.

My preferred way, though, is to snowflake in certain ways for one goal and snowflake in other ways for other goals. So, for example, if I save money by choosing free entertainment instead of something with a price tag (like I might normally do), I’d save that money for an entertainment splurge (like an iPad). On the other hand, if I save money with smart food buying, that would go towards the house instead.

Of course, this is a hypothetical assumption that I want an iPad instead of, say, a good paperback.

To put it all simply, snowflaking is a great tactic for any financial goal. It creates a powerful connection between big goals and the little choices we make each day, often in a very tangible fashion.

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